Ok, so I got it to work, well sort of.
By doing a show etherchannel load-balance, it shows the switch is configured for src-dst-ip
I brought the nics up one at a time, but after about 15 minutes I lose the management interface, but I have one guest running that lives on the Iscsi Vlan and has an address of the server vlan (different vlan from the iscsi. although I lose management I have a ping -t running that doesn't appear to be interrupted. On the management interface on the vmhost, I select vlan 2 and provide an ip that resides in the vlan 2 address space, also when I run the test from the console of the vm host, the gateway fails but it finds the dns servers which again live in a different vlan (server vlan). The only way I can get the management back is to shut down one of the ports in the port channel then I can re enable the second port